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'Green' sports car maker Fisker fires 75 percent of workforce

By Deepa Seetharaman, Reuters

Posted:
04/08/2013 11:23:58 AM EDT

A visitor looks at an electric car Karma of Fisker, an American company based in southern California, during the Ecologic Vehicles and Renewable Energies international exhibition, in Monaco, March 22, 2012. (AP Photo/Lionel Cironneau, File)

DETROIT — Fisker Automotive, the struggling government-backed hybrid sports car maker, on Friday terminated most of its rank-and-file employees in what sources said was a last-ditch effort to conserve cash and stave off a potential bankruptcy filing.

Fisker, which raised $1.2 billion from investors and tapped nearly $200 million in government loans, has "at least" $30 million in cash on hand, according to a source familiar with the company's finances.

The company's flagship vehicle, the $100,000-plus Karma plug-in hybrid, quickly won accolades for its styling and cachet with celebrities, including pop star Justin Bieber and actor Leonardo DiCaprio, who is also an investor in the company.

About 160 workers were fired at a Friday morning meeting at Fisker's Anaheim, California, headquarters, according to a source who attended the meeting. They were told that the company could not afford to give them severance payments.

Fisker confirmed in a statement that it let go about 75 percent of its workforce but did not specify the number of workers affected. It called the move "a necessary strategic step in our efforts to maximize the value of Fisker's core assets."

"Unfortunately we have reached a point where a significant reduction in our workforce has become necessary," Fisker said, adding that it was still searching for a strategic partner.

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The mass termination triggered a lawsuit seeking class-action status from angry former employees. A lawyer for the fired employees said he expects the company to file for bankruptcy "sooner rather than later."

A Fisker representative could not immediately answer questions on the company's financial position. In the past, the automaker has declined to comment on the possibility of a bankruptcy restructuring.

The layoffs, which hit departments including engineering, public relations and marketing, are the latest symptom of Fisker's cash crunch. In late March, Fisker put its entire U.S. workforce on furlough. It also hired law firm Kirkland & Ellis to advise on a possible bankruptcy filing.

Fisker asked 53 senior managers and executives to stay on board, primarily to pursue buyers for the company's assets, according to the source who attended Friday's meeting in Anaheim. The remaining Fisker executives also are continuing negotiations with the U.S. Department of Energy.

Friday's class action is one of several challenges Fisker has faced over the past month. In March, company founder Henrik Fisker abruptly resigned, citing "several major disagreements" with top management.

Fisker has not produced a car since July and has been seeking a financial backer to help finish the development of the Atlantic and produce it at a Delaware plant.

(Additional reporting by Nick Brown in New York and Paul Lienert in Detroit; editing by Jeffrey Benkoe and Matthew Lewis)